The German-made Busch & Müller Lumotec and D'Lumotec Topal (available with Senso light/dark sensor and Plus capacitor-powered standing light) are arguably the world's finest bicycle lights. Powered by a hub dynamo, the D'Lumotec offers hundred-thousand-hour LED illumination that starts working at 2 km/hr, a capacitor-powered standing light which allows the light to remain partially lit for several minutes after stopping, and a light/dark sensor that turns the light on in darkness.

With all of these features, the light has one unfortunate vulnerability: it is not waterproof. While it is closed enough from the top for water falling on it from above, it is open on the bottom end, and the circuitry inside (including the high-storage capacitor in the Plus version) is vulnerable to shorting if water gets into the housing from underneath. I'm not the first to notice this... Peter White Cycles' Schmidt/Lumotec page has a mention of it. (This is quite a long page... if you press Ctrl-F and search for "water" the relevant line will appear.)

This diagram shows a side view of the headlight housing. The blue arrow represents the path that water can take to get into the housing and the electronics. If the light is a "Plus" edition, it contains a high-capacity Goldcap capacitor (probably either 0.5 or 1 Farad.) If shorted while charged, the capacitor will explode with a loud pop. There's no danger of injury as this takes place inside the housing, but the headlight won't work anymore, and neither will the taillight as it needs the headlight to work to draw power from it, and the power surge may damage the taillight as well. Both lights will have to be sent in for repair and testing if you don't have another hub dynamo headlight around to test the taillight with.
The headlight (shown in red) should not be mounted upside-down from the handlebar stem. Rainwater (shown in blue) will be able to enter the housing and damage the headlight.
If the headlight is mounted at the fork arch (the semicircle of metal between the wheel and the fork crown attached to the fork stanchions, designed to hold a traditional caliper brake) and the front wheel does not have a fender, then water and dirt can be thrown from the tire into the exposed back of the headlight when the bicycle is in motion. The water shouldn't be able to get as far up as the capacitor, but could cause shorting of the taillight leads which are in this area.
If the headlight is mounted at the fork arch or crown without a fender and the bicycle is inverted when wet, water can drip off of the front tire directly into the housing and short the electronics. (Incidentally, this is what cooked my D'Lumotec Topal Senso Plus and prompted me to write this!)
I therefore recommended to have a front fender. It will keep water from the headlight when the bicycle is in motion, and even when inverted. However, I further recommended to not turn the bike over when wet even with a fender... it's just not worth the risk. The headlight base is shaped to perfectly fit over a fender in this configuration, as shown on this Busch & Müller page. Nor is it worth the risk to clean around the headlight with a hose or power washer, unless you seal the unit in a plastic bag first... and keep the hose or power washer stream away from your hub dynamo as well, as the pressure can push water past the seals and cause corrosion inside the hub, ruining it.